Bellevue to renew $8M dialysis contract amid union opposition

NYC Health + Hospitals/Bellevue will renew a five-year, $8 million contract with River Renal Dialysis Services to operate its inpatient dialysis services, the medical and professional affairs committee of the health system's board decided earlier this week. The agreement saves Bellevue $2.6 million annually compared to running its own dialysis services. The renewal was opposed by unions including District Council 37 and the New York State Nurses Association. "Our union has consistently opposed privatization of services as short sighted and wasteful," said Henry Garrido, executive director of District Council 37. "We have successfully worked with the City of New York to insource other services and we hope that Health and Hospitals will reconsider this proposal.” River Renal has provided inpatient dialysis services to the system since 2011, and this past December the for-profit dialysis provider received approval from the board to open an 18-station outpatient dialysis clinic on the hospital's campus. River Renal will pay about $2.5 million in occupancy fees, offsetting some of the costs of its inpatient contract. The company provides about 3,000 treatments annually to patients in the emergency department, in the intensive care unit and to patients in the Department of Corrections' custody. It also operates Bellevue's six-bed acute dialysis unit. The health system said using the for-profit provider has resulted in improvements in quality. River Renal's Bellevue location has a five-star quality rating from CMS. Before the initial contract with River Renal, Bellevue's quality performance was below state standards in eight of nine categories. In the past, unions, such as DC 37 and NYSNA have objected to the outsourcing of dialysis services, including a successful bid to prevent the sale of four kidney-treatment programs to a for-profit operator in 2015. The decision is subject to approval by the full board Thursday evening.—J.L.

MSK submits plans for $1.5B expansion

Memorial Sloan Kettering Cancer Center is seeking state approval for new components of its planned $1.5 billion David Koch Center for Cancer Care, a 760,000-square-foot ambulatory care center scheduled to open in 2019. MSK is proposing the addition of two practices in dermatology and plastic and reconstructive surgery as well as a 16-bed inpatient unit for chemotherapy patients and those requiring hospitalization for interventional radiology procedures. The hospital resubmitted a certificate-of-need application to consolidate all aspects of the project for regulatory review. The center will be located on East 74th Street between York Avenue and FDR Drive. The project dates back to August 2012, when MSK was awarded a bid to redevelop a city-owned lot jointly with CUNY Hunter College. Upon opening, the site will employ 1,352 full-time equivalent workers. The ambulatory care center is expected to lose $35.2 million in its third year of operation, but will be capable of meeting anticipated ambulatory care demand through 2026. "Although the facility will not generate an operating profit during its first three years of operations since it must absorb the full amount of interest expense while operations ramp up, it will generate positive cash flow from operations," MSK wrote in its application, adding that the project "supports our commitment to exceptional patient care, innovative research and outstanding educational programs."—J.L.

State seeks proposals for addiction clubhouses

Gov. Andrew Cuomo announced Wednesday that the state Office of Alcoholism and Substance Abuse Services is looking for organizations to open four youth clubhouses in New York City for young people recovering from drug and alcohol abuse. The state has allocated $1 million for the centers, to be located in Queens, Brooklyn, the Bronx and on Staten Island. Youth clubhouses, intended to offer adolescents and young adults a nonclinical setting for recovery, are part of the state's broader efforts to expand opioid-addiction services, which was allocated almost $200 million in the fiscal 2017 state budget. So far, 11 clubhouses have opened or are in the process of opening throughout the state, according to Cuomo's announcement. Prospective bidders for the New York City contracts will have to notify OASAS of their intention to bid by Feb. 8. —C.L.

AT A GLANCE

WHO'S NEWS: Daniel Lowenstein started this month as vice president of government affairs for the Visiting Nurse Service of New York. He was previously senior director of public affairs for Primary Care Development Corp.

PRIOR AUTHORIZATIONS: Sixteen health care organizations, including the American Medical Association and the American Hospital Association announced a new coalition that will lobby health plans to streamline prior authorization for medical tests, procedures, devices and drugs, reported Modern Healthcare.

In its liquidation of Health Republic Insurance of New York, the state Department of Financial Services has filed a motion to pay out-of-network claims directly to health care providers

If the motion is granted by state Supreme Court Justice Carol Edmead, health care providers, including Northwell Health, would face one less hurdle to receiving some payment from the defunct insurer.

Northwell Health representatives said they believe the company is one of Health Republic's largest creditors, with $21.7 million in outstanding claims, including $17.2 million in out-of-network claims, according to court filings. Typically Northwell receives an assignment of benefits before providing treatment to a patient whose health plan's network does not include Northwell, and it receives payment directly from the insurer.

In the case of Health Republic, Northwell's leadership was concerned that out-of-network claims processed by DFS might be paid to the patient with the expectation the patient would pass the funds on to Northwell.

DFS' motion would allow Northwell and other out-of-network providers to be paid directly.

"The liquidator may, where appropriate, make an allowed payment directly to a health care provider for the costs of covered services, whether the claim for payment was made by the policyholder, the health care provider or both," according to the motion by DFS, which is running the liquidation.

If a member's policy with Health Republic contained a provision forbidding the assignment of benefits to providers, the court could invalidate that provision.

Timothy Butler, an attorney representing Northwell and a managing partner at Tibbetts, Keating & Butler, told Crain's that direct payment would benefit all out-of-network providers and keep them from having to involve patients, who might not understand why they are receiving the checks and might inadvertently spend the money.

"It has the potential to create exposure for them to medical bills which they shouldn't be exposed to," Butler said.

In the case of a patient already having paid a provider for out-of-network care and the doctor or hospital having submitted a duplicate claim, the liquidator would reimburse the patient, Butler said.

What's unclear is what Health Republic assets will remain to pay providers and policyholders. The insurer had $99.1 million in assets and $466 million in liabilities as of Sept. 30, according to the most recent financial statements available. New York hospitals have said they are owed about $200 million in outstanding claims.

Some of the remaining assets are trickling out for administrative expenses. Health Republic paid $5.4 million, including $1.5 million to restructuring firm Alvarez & Marsal, from May to November last year.

A hearing on DFS' motion will be held Feb. 17 in state Supreme Court in Manhattan, with responses to the motion due on Feb. 10.—J.L.

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